Nervous investors eye key level in choppy trade

By IBT Staff Reporter On 06/02/11 AT 12:08 PM

The S&P 500 traded at a six-week low, taking out its lowest point for May at 1,311.80, as nervous investors focused on key market levels to manage risk a day after stocks' worst one-day fall in nearly a year.

Stocks traded choppily before heading lower after the open as data showing stubbornly high jobless claims and lackluster chain-store sales provided little reason to get back into the market after a string of weak economic data.

Traders are honing in on 1,311 on the S&P 500, the index's low point in May, as near-term support. If that level is broken at the close it could open the window to a move back to the April low at 1,294, and the March lows near 1260-1250, the index's 200-day moving average.

It's a trigger point for managers, as people don't really know what's going on, said Robert Sluymer, managing director for U.S. technical research at RBC Capital Markets in New York. Support levels become very, very important, particularly heading into the back half of the day.

In the periods where you get a lot of stress in the market, people rely on technicals as a line in the sand where they're going to take risk off, he said.

Bank stocks stabilized after falling on news that Goldman Sachs received a subpoena from New York prosecutors seeking information on the investment bank's role leading into the global financial crisis. Goldman's stock fell 1.4 percent to $134.25.

Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 422,000, while economists polled by Reuters forecast 415,000.

Investors seemed reluctant to make big bets ahead of the non-farm payrolls data due on Friday, which is expected to show 150,000 jobs were added in May, according to a Thomson Reuters poll of economists.

Strength in education stocks sent the Nasdaq higher after U.S. officials softened rules that could have cut off tuition aid to programs run by for-profit colleges.

A white Fiat van rammed into pedestrians outside enjoying a late afternoon stroll on Las Ramblas in Barcelona on Thursday killing at least 13 people and leaving hundreds injured. The Islamic State group claimed responsibility for the attack.